Rupee down on importer dollar demand

Reuters: The rupee fell for a fourth straight session on Wednesday, as importer dollar demand outpaced mild exporter greenback selling.

Some dealers say the rupee will fall further if the Central Bank fails to tighten interest rates.

The spot rupee ended at 138.80/95 per dollar, 0.36% weaker compared with Tuesday’s close of 138.30/50.

“Unless the Central Bank increases market interest rates or we see huge dollar inflows, the rupee will be on a falling trend,” said a currency dealer asking not to be named.

Some dealers said the central bank, which usually directs the market through State-run banks, did not interfere in the market on Wednesday.

However, they said the market was reluctant to trade the rupee below 139.00 level, which is seen as the Central Bank’s desired level.

The rupee fell 3% on Friday to a record low of 139.00 per dollar after the Central Bank effectively floated the currency by ceasing to quote its own reference rate.